From: Mike Montgomery [mmontgo749@comcast.net]
Sent: Sunday, January 25, 2004 7:02 AM
To: rule-comments@sec.gov
Subject: S7-04-04:
Dear Security and Exchange Commission.
I am glad you are allowing the general public to provide comments regarding how
investment firms and others should be covered in the Code of Ethics you are
proposing and collecting comments on. These are my comments. I will encourage
others to do the same. I understand that anyone can comment by email or hard
copy, but not both using the email address above and subject as shown.
I believe that the code of ethics is vital:
a.. All mutual fund and other trading firms should be graded by their
adherence to that code of ethics and that grade be updated and published
semi-annually at minimum, or quarterly if possible.
b.. All firms be encouraged to give the individual investor AND the employees
of the publicly listed companies and their retirement fund, the primary focus of
the code, then institutional investors and others regarding the criteria in
developing this code.
c.. All firms should be graded very poorly if they "window dress" their funds
by actually investing other than their annual statements say they are. This
provision should include a time period that must pass of at least 90 days before
they can list the stock or bond as if it were a long term investment.
d.. There could perhaps be a way to report a mutual funds holdings by showing
(in quarters of a year) how long they held which stocks or bonds and which
quarter they purchased how many shares as part of all annual reports.
e.. Insider trading, while already illegal, should have major punitive
implications for any firm that is found to have violated that trust beyond what
the courts or the SEC may determine, by removing the fund, its board of
directors, and other corporate officers from participating for a period of 5
years for violation of the code of ethics. Their fund and the company shall be
listed as having been removed or blackballed and a link provided to indicate who
was involved.
f.. The statements below that may also apply to mutual fund companies or other
trading firms should also apply in this section, especially regarding their
investments in the companies that do not score well as indicated in the criteria
mentioned below.
Regarding companies that are publicly listed (whether in our country or other
countries). It is expected that US companies would have to report, foreign firms
may not report and should be listed as not reporting or devise a way to report
what can be obtained from other sources and list those:
We MUST have a means by which you can help publicize reports indicating the
following in a way that affects the grade given regarding adherence to the same
code of ethics by public companies which should also be imposed and graded on
the same cycle, based on the following:
a.. Does the company have a long term pension plan that protects retirees for
a minimum of 25 years into the future based on current financial information,
and is there a plan to continue this beyond the normally reported financial
statements?
b.. Does the firm have a means to protect their employees from hostile
takeovers and an internal code of ethics their Board of Directors and all
corporate officers must agree to uphold, that includes the provisions of the
other Codes of Ethics expected by their authorities having jurisdiction whether
state, local, or federal such as the one these comments are being provided?
c.. Has the firm exported jobs outside the United States in the previous 8
quarters? Grade that negatively if they have.
d.. What plans does the company have to export more jobs in the next 8
quarters and report which quarters that is planned? These numbers should
adversely affect their score if they export jobs OR, import immigrants at lesser
pay than those they replaced, OR report a loss of employees without reporting
investments in foreign firms whether by acquisition or contracting out, that
might do the work of those laid off in the USA.
e.. ANY listed company that has sold an interest in the company at the expense
of the company retirement plan, to export jobs, or other actions which could
affect negatively the employment numbers of United States Citizens. This score
should follow the company and the officers individuals involved for 5 years or
longer.
f.. Grade the companies based on the following composite characteristics;
family friendly, health care, day care, physical fitness, support for the
National Guard and their participating employees, volunteerism, community
support whether of non-profits, schools, libraries or other community needs.
g.. Grade the companies based on their use of foreign employees in factories
that are adversely affecting those employees health and safety whether
considered sweat shops, youth labor, or other criteria.
h.. Grade companies based on their investment in companies or countries that
do not have laws protecting intellectual rights, property rights, or do not have
goals of improving their internal codes and administrative laws regarding Health
and Safety, Building codes, Electrical Codes, and those similar to our OSHA and
the other Codes of Federal Regulations.
Conclusion:
It is my belief that the coming two decades may test us beyond any time since
the great depression, or certainly since WW II. While our baby boomers retire (I
am one), there will be far fewer employees supporting them in 2012 or after than
at any other time in history. We will have exported more jobs, and lost more
manufacturing capability than at any time in history. These facts will also work
to our disadvantage if we find ourselves involved in a global conflict larger
than what we have experienced in the last three decades. We will be vulnerable.
The wars that have been fought in the first half of the last century were more
clearly defined. The evil that existed then, exists today, but in forms that do
not necessarily follow international borders. Our citizens must have leaders
that can see this vulnerability and provide the means to encourage other
countries to improve their citizens lot in life, including their own codes of
ethics, laws, individual rights, so these threats might be mitigated by their
own citizens. Without this kind of global far reaching thinking, your code of
ethics can either contribute to the success of our future generations, or their
downfall. This is on your shoulders. Decide wisely. We are all counting on you
to put evil back in it's box in those areas you can affect the most.
Sincerely,
Mike Montgomery